10 Best Bargain Stocks to Buy in May

6. Alphabet Inc. (NASDAQ:GOOGL)

Forward P/E as of April 11: ~17.6x

Average Upside Potential: ~33.6%

Number of Hedge Fund Holders: 234

Morningstar believes that Alphabet Inc. (NASDAQ:GOOGL) has a wide moat, stemming from its intangible assets, network effect, cost advantage, and customer switching costs. The company’s core advertising business remains deeply entrenched in advertising budgets, enabling the company to reap the benefits arising from a secular increase in digital advertising spending. With enterprises seeking to digitize their workloads, Alphabet Inc. (NASDAQ:GOOGL) possesses significant opportunity in the public cloud space.

Morningstar expects the Google Search business to grow at a mid-to-high single-digit level over the upcoming 5 years. Furthermore, the firm anticipates YouTube to grow at a low double-digit rate in the upcoming 5 years as a healthy advertising business continues to be aided by the growing subscription business. Alphabet Inc. (NASDAQ:GOOGL) has a robust competitive position in the broader tech industry, thanks to its extensive distribution network and advanced AI infrastructure. Furthermore, Alphabet Inc. (NASDAQ:GOOGL)’s future growth remains heavily dependent on its AI initiatives and the successful AI integration throughout its product suite. Also, the expansion of AI capabilities in search, advertising, and cloud services offers numerous revenue growth opportunities.

Cooper Investors, an investment management firm, released its Q3 2024 investor letter. Here is what the fund said:

“Alphabet Inc.’s (NASDAQ:GOOGL) operating performance remains strong with sales growing 14% in the most recent quarter. Highlights included the ongoing secular growth of digital advertising driving Google search (+14%), YouTube’s continued success as a leading content platform (+13%) and the performance of the Cloud business (+29%). In conjunction with this strong sales momentum, Alphabet’s increased focus on expenses is delivering margin expansion such that Operating Income grew 26%.

Despite this operational momentum, Alphabet’s share price declined 11% in the quarter as a federal judge ruled against the company in its case with the US Department of Justice. The case pertains to Google’s monopolisation of both the search and digital advertising markets which is claimed to limit competition and innovation and/or in

Potential remedies include prohibiting exclusive agreements which make Google the default search engine on Apple or Samsung devices, forcing Alphabet to share its advertising technology with rivals, or in the extreme breaking the company apart. The timing and outcomes remain somewhat uncertain however we remain of the belief that at the fundamental level Alphabet’s products are best of breed across several verticals and are  benefitting from secular industry trends and that these factors will be the ultimate determinant of long-term shareholder returns.”